Rising Drug Costs and Mental Health Claims Drive Historic Premium Spikes

The sticker shock is real, and it’s coming to your family’s healthcare budget. Health insurance premiums are poised to jump dramatically in 2026, with some insurers requesting increases as high as 20% – the largest spike we’ve seen in nearly a decade.

This isn’t just another year of modest healthcare cost growth. We’re witnessing a perfect storm of expensive new medications, surging mental health claims, and million-dollar gene therapies that’s forcing insurers to raise rates across the board. For working families already stretched thin, these increases represent a serious threat to healthcare access and financial stability.

The Numbers Don’t Lie: Premium Increases Hit Record Levels

ACA Marketplace Plans Lead the Surge

ACA marketplace insurers have proposed a median premium increase of 18% for 2026, with some requesting hikes as high as 59%. This marks the steepest rate increase since 2018, according to Kaiser Family Foundation analysis.

The average proposed increase across 312 insurers nationwide sits at 20% – a figure that would add hundreds of dollars to monthly premiums for millions of Americans. In Washington state alone, insurers are seeking an average rate increase of 21.2% for individual market plans.

Employer-Sponsored Plans Feel the Pinch Too

Workers with employer-sponsored coverage won’t escape the pain. The Business Group on Health predicts a 9% median increase in healthcare costs for large employers in 2026 – the biggest jump in over a decade.

PwC’s Health Research Institute projects the medical cost trend will hold steady at 8.5% in 2026, while pharmacy costs are expected to surge 11% annually. For context, family premiums for employer-sponsored plans already reached $25,572 in 2024, with workers contributing an average of $6,296.

The Costly Culprits Behind Rising Premiums

GLP-1 Drugs: The Ozempic Effect

Perhaps no single factor is driving costs higher than GLP-1 medications like Ozempic, Wegovy, and Mounjaro. These diabetes and weight-loss drugs now account for 6.7% of total drug costs, despite being used by less than 3% of covered members.

The numbers are staggering. Sales of GLP-1 therapies grew 58% in 2023 compared to 2022, with Ozempic alone seeing a 78.7% increase in sales. Utilization is projected to increase another 73.1% in 2025.

“Among the many innovative treatments being developed, GLP-1 drugs continue to be regarded by health plans as a top cost inflator,” notes PwC’s latest medical trend report. These medications are projected to account for between 0.5% and 1.0% of the estimated medical cost trend for 2026.

The monthly costs are eye-watering: Ozempic carries a list price of $968.52 per pen, while Mounjaro costs $1,069.08 for a month’s supply. For Navitus clients, GLP-1 drugs increased the total per-member-per-month trend by 5.1% in 2023.

Mental Health Claims Skyrocket

The pandemic’s mental health impact continues reverberating through insurance claims. The percentage of patients receiving medical services with mental health diagnoses rose by 39.8% between 2019 and 2023, jumping from 13.5% to 18.9%.

Telehealth claims for mental health services increased by an astronomical 5,123.4% from 2019 to 2023. While telehealth adoption has stabilized, the underlying demand for mental health services remains elevated.

“73% of employers reported increased usage of mental health and substance use disorder services, with 17% anticipating further increases,” according to the Business Group on Health’s 2025 survey.

Million-Dollar Gene Therapies Enter the Market

Perhaps most shocking are the ultra-expensive gene therapies hitting the market. These one-time treatments carry price tags that would make even billionaires wince:

• Hemgenix for hemophilia B: $3.5 million
• Elevidys for muscular dystrophy: $3.2 million
• Roctavian for hemophilia A: $2.9 million
• Zolgensma for spinal muscular atrophy: $2.1 million

While patient numbers remain small, even a handful of claims can devastate an insurance pool. The number of patients treated with gene therapies is expected to exceed 94,000 annually by 2025.

Emergency Department Costs Continue Climbing

Emergency department utilization remains stubbornly high, with 155.4 million visits recorded in 2022 – translating to 47.3 visits per 100 persons. Hospital admissions from emergency departments reached 17.8 million, with 3.1 million requiring critical care.

Unit costs for emergency services continue inflating due to healthcare worker shortages, system consolidation, and hospitals’ need to recover pandemic-related losses.

Coverage Changes That Hit Your Wallet

Higher Deductibles and Out-of-Pocket Maximums

As premiums rise, insurers are also shifting more costs to patients through higher deductibles and out-of-pocket maximums. The average deductible for single coverage now sits at $1,787, with 32% of workers facing deductibles of $2,000 or more.

The federal out-of-pocket maximums for ACA plans are jumping to $10,600 for individuals and $21,200 for families in 2026 – increases of $1,150 and $2,300 respectively from 2025 levels.

Prior Authorization and Step Therapy Expand

Employers and insurers are fighting back with tighter utilization management. About 53% of employers plan to implement cost-cutting measures in 2025, up from 44% in 2024.

Prior authorization requirements are expanding, particularly for expensive medications like GLP-1s. CVS Caremark reports achieving 68% savings in the GLP-1 weight management class through utilization management strategies.

The Medicare Wild Card

Medicare’s recent decision to cover Wegovy for cardiovascular risk reduction could shift costs from private insurers to the federal program. Following the FDA’s March 2024 approval expanding Wegovy’s label to include cardiovascular benefits, CMS issued guidance allowing Medicare Part D plans to cover the medication.

This policy shift represents a significant change, as weight-loss medications were historically excluded from Medicare coverage. The move could increase utilization among Medicare beneficiaries while potentially reducing pressure on private insurance premiums.

What This Means for American Families

The Affordability Crisis Deepens

For millions of Americans, these premium increases represent more than just higher bills – they threaten access to care itself. With wages failing to keep pace with healthcare inflation, families face impossible choices between medical care and other necessities.

“Both the unit cost and utilization of healthcare services have surged, and employers and employees must together address affordability,” warns Ellen Kelsay, CEO of Business Group on Health.

Innovation vs. Access

We’re witnessing a fundamental tension between medical innovation and healthcare accessibility. Life-saving gene therapies and breakthrough medications like GLP-1s represent genuine advances in treating previously intractable conditions.

Yet their astronomical costs strain our insurance system’s ability to provide broad access to care. As one industry observer noted, “The US healthcare system is heading into another year of powerful inflationary forces exerting pressure with few deflationary forces in sight.”

Looking Ahead: Can We Bend the Cost Curve?

Employer Strategies

Large employers aren’t sitting idle. They’re implementing centers of excellence programs, with 50% offering cancer centers of excellence in 2026 and 23% planning to add them by 2028. Others are exploring narrow networks and site-of-care selection to link quality with cost savings.

Policy Solutions on the Horizon

Policymakers are exploring innovative financing models for high-cost therapies, including:

• Outcomes-based contracts that tie payment to therapy effectiveness
• Annuity payment models spreading costs over multiple years
• Risk pools distributing high-cost claims across multiple payers
• Accelerated biosimilar adoption to increase competition

The Path Forward

The healthcare affordability crisis demands bold action from all stakeholders. Insurers must find ways to cover breakthrough therapies without breaking the bank. Employers need innovative benefit designs that protect workers while controlling costs. And policymakers must address the structural issues driving unsustainable healthcare inflation.

As we prepare for 2026’s premium increases, one thing is clear: the status quo is unsustainable. American families deserve better than choosing between life-saving medications and financial security.

The solutions exist, but they require the political will to challenge entrenched interests and reimagine how we finance healthcare in America. Our health – and our economy – depends on getting this right.

What can you do? Review your insurance options carefully during open enrollment, advocate for transparency in healthcare pricing, and support policies that prioritize affordability alongside innovation. The future of American healthcare hangs in the balance.